Understanding electricity billing preferences in rural and urban India: Evidence from a conjoint experiment

Abstract

To address issues of non-payment, high costs, and theft, paying a fixed fee for electricity is common among many developing countries. We use a conjoint experiment to study electricity billing preferences among urban and rural communities in Uttar Pradesh, India. We find that 59.5% of respondents (95% CI: 58.2%–60.9%) prefer consumption-based tariffs as opposed to fixed fee ones, favoring lower base charges among a number of factors. We additionally use Bayesian Additive Regression Trees to test for heterogeneous treatment effects. Respondents with more appliances, using more hours of electricity, and who live in rural areas with meters prefer consumption-based plans with lower base rates. Our results suggest that policy reforms should move beyond fixed rate schemes especially if respondents would accept higher unit tariffs with improved service.